Application. The initial meeting can be done over the phone, in person, or by submitting the electronic loan application. We recommend that first-time homebuyers come into the office so we can better guide you through the process. Based on the information gathered for the application, your Loan Consultant can determine what options are available to you.

Credit Check. Lenders like to look at a potential borrower’s credit history and get credit/FICO scores from major credit bureaus (TransUnion, Experian, and Equifax). This helps the lender to make a more informed decision regarding loan prequalification.

The FICO score represents the statistical summary of data contained within the credit report. It includes bill payment history and the number of outstanding debts in comparison to the borrower’s income. The higher a borrower’s credit score, the easier it is to obtain a loan or to pre-qualify for a mortgage.

If the borrower routinely pays bills late, then a lower credit score is expected. A lower score may persuade the lender to reject the application, require a large down payment, or assess a high interest rate in order to reduce the risk they are taking on the borrower. In instances where your FICO score needs improvement before continuing on with the loan process, we can help to raise your score and get you back on the path to homeownership.

Pre-qualifying and Pre-approval. After basic calculations have been done and a financial statement has been completed, the borrower can ask the lender for a pre-qualification or pre-approval letter.

A loan pre-qualification letter states that loan approval is likely, based on credit history and income. Pre-qualifying lets the borrower know exactly how much money can be borrowed and how much money will be needed for a down payment.

A loan pre-approval letter states that a specific loan amount is guaranteed and that a lender will actually loan the borrower money after an appraisal of the property and a purchase contract and title report have been drawn up.

A pre-approval letter is more binding and it means the lender has already performed a credit check and evaluated the financial situation, rather than rely on the borrowers own statements like what is done in pre-qualification.

There are two basic ratios that lenders use to determine how much to preapprove a borrower.

Ratio #1: The borrower’s total monthly housing costs compared to their total monthly income.

• The borrower should write down, before deductions, the total gross amount received per month. • The number in step 1 should be multiplied by .28. This is what most lenders will use as a guide to what the total housing costs are for the borrower. Depending on the percentage, a higher percentage may be used.

Ratio #2: The borrower’s debt to income

• The borrower should write down all monthly payments that extend beyond 11 months into the future. These can be installment loans, car loans, credit card payments, etc. • The total number in the first step should be multiplied by .35. Total monthly debt should not exceed the resulting number.

2 PREPARE TO BORROW

Your HLC Team Loan Consultant will give you an idea of the costs associated with your loan and your monthly payments by giving you a copy of your Loan Estimate and discussing it with you. This will allow you to look at your overall budget and prepare for homeownership. If you are a number cruncher and want to get an idea of the costs associated with homeownership, visit our calculators page. These calculators give you general estimates. Your loan officer can give you more exact numbers based on your situation. Ask questions! We are here to help. Visit our FAQ for some common inquiries.

3 FIND YOUR REAL ESTATE AGENT

A dependable Realtor® will help you work within your budget and find a home you love. Ask your friends and family for their Realtor® recommendations. We can recommend high-quality Realtors® in your area.

4 FIND A HOME AT A PRICE THAT WORKS FOR YOU

Have a discussion with your Realtor® about what you want in a home. It helps to have a list of must-have features and some nice-to-have features so that you know where you can compromise. Keep on the lookout for things that might raise your monthly payment. Mello Roos taxes or association dues might put you over budget. Your Realtor® can help. Stay within your budget when writing offers. As long as you stay within budget, it may be better to go below, at, or above the seller’s asking price. While writing offers and negotiating a purchase price, you may need to ask the seller to pay closing costs or ask them to make certain repairs, depending on the situation. Your Realtor® and loan officer can guide you through these decisions. We can send a pre-qualification letter to you and your agent when you write an offer. This will strengthen your offer by telling the seller that you are ready and able to purchase the home.

5 THE LOAN PROCESS

This is a brief outline on how the HLC Team home loan process works. Each and every loan is different and you may find that your process works a little differently. Not to worry, we will be with you every step of the way. Purchasing a home can be overwhelming. Don’t get discouraged if you do not understand a form or a part of the process. We can explain anything that is confusing. For more information on the terms used in this outline see our Loan Lingo page. Loan Package. After your appointment with an HLC Team Loan Consultant, your loan is given to an HLC Team Production Assistant, who will run automated underwriting approvals, verify employment, order an appraisal, order escrow, order title information, and prepare the loan package. At this time your loan package will be ready for signatures. In Processing. Once your loan has been entered into the computer system, it is then given to a HLC Team Loan Processor. The loan processor compiles all the necessary information and paperwork needed to finalize your loan for submission (i.e. credit report, appraisal, escrow instructions, and title report). Submitted to Underwriting. After all of these items are received, your loan is then submitted to an underwriter. The underwriter is the person who takes all the information provided and validates that the input on the original application was accurate. Once the validation is complete, final loan approval with conditions is then issued. Loan Approval. As part of your loan approval, you may be asked to provide additional information to the underwriter. Once all of these items have been received and “signed-off” by the underwriter, we then order your loan documents. Loan Documents. After the loan documents have been drawn, they require signatures and notarizing which is normally completed at your escrow company. If that is not convenient, The HLC Team can arrange for you to sign them at our office, your home or your office. Review and Funding. After signing, loan documents are returned to the funding department to be reviewed and to prepare the loan for funding. Once the loan has funded, it is then recorded. Once the recording by the County Recorder’s office has taken place, your loan has been completed. You can then move in to your new home!

6 ENJOYING HOMEOWNERSHIP

Remember that homeownership will help you and your family maintain financial stability and build wealth over time. Feel accomplished in your investment. Keep in touch with us even after the loan process is over. We are happy to answer any questions! If you are looking to make renovations to your home, please visit our Referral List for some of the trusted professionals we work with. It is a good idea to look at your home financing options every few years. When rates are low or when your financial plans change, refinancing can often be a tool to help you reach other financial goals. Give us a call to discuss home financing options at any time.

If you are having difficulty meeting your monthly obligations, contact a credit counseling agency near you. The Department of Housing and Urban Development (HUD) can provide you with the name and address of the local HUD-approved counseling agency by calling their toll-free hotline at 800-569-4287.